Vestas warns war in Ukraine is adding pressure on wind industry and stocks are falling

Blades for wind turbines can be seen at the factory grounds of Vestas Wind Technology company, located in the northern Chinese city of Tianjin, September 14, 2010. REUTERS/David Gray/Files

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COPENHAGEN, May 2 (Reuters) – Wind turbine maker Vestas (VWS.CO) posted a steep first quarter loss and cut its 2022 margin forecast due to the war in Ukraine and writedowns in its offshore business , reflecting an industry-wide struggle to turn a profit despite record demand.

The focus on renewables has intensified as the West steps up efforts to wean itself off Russian fossil fuels, but what Moscow calls its ‘special operation’ in Ukraine has also pushed up already high material costs. raw materials and freight.

“The business environment deteriorated significantly during the first quarter of 2022 due to Russia’s invasion of Ukraine and the associated ripple effects on global trade and cost inflation,” he said. said Vestas in its earnings report on Sunday evening.

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Its shares, which had soared after its neighbor Russia invaded, were trading down 6.8% at 0847 GMT on Monday, wiping out all those gains.

The world’s largest wind turbine maker now expects an earnings before interest and tax (EBIT) margin before special items of between minus 5% and 0%, down from a previously guided range of 0 to 4. %.

Sales are estimated at 14.5-16 billion euros, against 15-16.5 billion euros previously.

The former CEO of Vestas’ main rival Siemens Gamesa (SGREN.MC) warned last year that a decade-long race to cut the cost of wind power generation could not continue because it reduce the ability of turbine producers to invest in new technologies.

Siemens Gamesa reported deeper-than-expected operating issues and rising costs last month as it also posted a substantial quarterly loss. Read more

Vestas said costs related to the disposal of its Russian assets were 401 million euros in the first quarter.

It also took impairments and warranty provisions related to older offshore wind platforms, among others, for a value of 176 million euros.

“We’ve seen similar things from its competitors and it shows an unhealthy race that means turbine makers aren’t making enough money on their products and can’t sell them for long enough,” the analyst told Reuters. of Sydbank, Jacob Pedersen, calling the move “very concerning”.

While first-quarter sales were slightly above expectations, the company recorded a loss before interest, taxes and special items of 329 million euros, far exceeding the loss of 91 million euros expected by analysts in a survey compiled by the company.

Vestas’ EBIT margin before special items decreased by 9.3 percentage points compared to the same period last year to a negative result of 13.2%.

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Reporting by Stine Jacobsen Editing by Tom Hogue and Mark Potter and Kirsten Donovan

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